4 ms·

This is a good point. However for me the annoyance is not about reporting the decrease, it's the fact that if capital drops below 50%, government is now in cont

This is a good point. However for me the annoyance is not about reporting the decrease, it's the fact that if capital drops below 50%, government is now in control whether they exercise that control or not. I would understand something like 10% but 50% is just ridiculous to me.

ProblemFactory 9y ago
I think the confusion here might be "starting capital" vs "registered share capital". You should set the registered share capital to the minimum allowed 2500 eur. Even companies making hundreds of millions of euros in revenue set usually set it to 25000 eur. You can then invest any amount over that as your actual starting funds without increasing the registered share value. That way the company is only required to own at least 2500 eur in assets, which should not be a problem for any serious business.
- edwin01 9y ago
  Solid advice. I was stupid enough to follow the process estonian gov had laid out and it really didn't make this distinction at any point so I registered our full capital as share capital.
- jessaustin 8y ago
  If one didn't have this background knowledge, one might hesitate to enter a totally fictitious number on this form.
  - pavlov 8y ago
    What's the fictitious number? You do need to show proof that you have the 2500 € in a bank account.
    - jessaustin 8y ago
      If the actual number is 100000, then 2500 seems fictitious?
      - pavlov 8y ago
        It's just a matter of how you want to structure the balance sheet. You can have 2.5k€ share capital and 97.5k€ free capital. This is usually a better arrangement than having it all in the share capital which is "bound" equity. (Bound is probably not the right English word for this — I only know the terminology in Finnish.)
      - ProblemFactory 8y ago
        The confusion here stems from the multiple meanings of the word "capital". The logic is identical to for example founding a company in the UK: https://www.gov.uk/limited-company-formation/shareholders https://www.gov.uk/limited-company-formation/shareholders You pick a "name value" and number of shares when founding, for example £1 x 500 shares. This is the "share capital", and official maximum liability of the founders for the company's debts. It also defines the smallest unit of ownership that can be assigned to a person. But of course the actual starting investment, assets, and the market value of the shares can be much higher. Estonia doesn't use the concept of "number of shares out of total shares", but instead "euros of ownership out of total share capital". For a typical small business you would set it to 2500 EUR and can split ownership at 1/2500 granularity.
pavlov 9y ago
I agree, 50% seems arbitrary. Finnish law only requires registration of negative equity. In practice the difference between 10% and 50% is only 1000 euros though, assuming your company is registered with the minimum required share capital of 2500 €.

ProblemFactory 9y ago

I think the confusion here might be "starting capital" vs "registered share capital". You should set the registered share capital to the minimum allowed 2500 eur. Even companies making hundreds of millions of euros in revenue set usually set it to 25000 eur. You can then invest any amount over that as your actual starting funds without increasing the registered share value. That way the company is only required to own at least 2500 eur in assets, which should not be a problem for any serious business.

edwin01 9y ago
Solid advice. I was stupid enough to follow the process estonian gov had laid out and it really didn't make this distinction at any point so I registered our full capital as share capital.
jessaustin 8y ago
If one didn't have this background knowledge, one might hesitate to enter a totally fictitious number on this form.
- pavlov 8y ago
  What's the fictitious number? You do need to show proof that you have the 2500 € in a bank account.
  - jessaustin 8y ago
    If the actual number is 100000, then 2500 seems fictitious?
    - pavlov 8y ago
      It's just a matter of how you want to structure the balance sheet. You can have 2.5k€ share capital and 97.5k€ free capital. This is usually a better arrangement than having it all in the share capital which is "bound" equity. (Bound is probably not the right English word for this — I only know the terminology in Finnish.)
    - ProblemFactory 8y ago
      The confusion here stems from the multiple meanings of the word "capital". The logic is identical to for example founding a company in the UK: https://www.gov.uk/limited-company-formation/shareholders https://www.gov.uk/limited-company-formation/shareholders You pick a "name value" and number of shares when founding, for example £1 x 500 shares. This is the "share capital", and official maximum liability of the founders for the company's debts. It also defines the smallest unit of ownership that can be assigned to a person. But of course the actual starting investment, assets, and the market value of the shares can be much higher. Estonia doesn't use the concept of "number of shares out of total shares", but instead "euros of ownership out of total share capital". For a typical small business you would set it to 2500 EUR and can split ownership at 1/2500 granularity.

pavlov 9y ago

I agree, 50% seems arbitrary. Finnish law only requires registration of negative equity. In practice the difference between 10% and 50% is only 1000 euros though, assuming your company is registered with the minimum required share capital of 2500 €.